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New submitter dryriver writes with this snippet from the BBC: "Apple paid only $713m (£445m) Tax in the year to 29 September on foreign pre-tax profits of $36.8bn (£23.0bn), a remarkably low rate of 1.9%. Apple channels much of its business in Europe through a subsidiary in the Republic of Ireland, which has lower corporation tax than Britain. But even Ireland charges 12.5%, compared with Britain's 24%. Apple is the latest company to be identified as paying low rates of overseas tax, following Starbucks, Facebook and Google in recent weeks. It has not been suggested that any of their tax avoidance schemes are illegal. Many multinational companies manage to pay substantially below the official corporation tax rates by using tax havens such as the Caribbean islands."

As long as it's tax avoidance, rather than tax evasion, nothing illegal in this. Everyone (corporations included) want to pay as little tax as possible. It's the governments job to close the loopholes. It's the beancounters and lawyars jobs to find the new ones.

If I understand it correctly it would mean that Apple (as a company) won't pay any taxes at all.

And the rich could probably avoid being taxed on some stuff by attending more company promotional and marketing events. You'll still get them on private dinners at expensive restaurants etc, but not on the big ticket items - yachts, planes, maybe even property (Disney won't have to pay tax on Disneyland, the tax is just on the people buying the tickets right?).

I disagree - if more corporations were playing the game honestly, and actually shouldering their share of the tax burden, the overall tax rates could be lower, and regular citizens who can't escape tax as easily, could pay less. Therefore, with lower tax rates, there would be a lower marginal reward per tax payer for dodging the system.

The problem is, right now, the biggest and richest corporations and individuals can escape a large chunk of the tax that they are supposed to be paying, so more has to be paid by middle and lower level tax payers to make up the shortfall.

Another part of the problem is tax avoidance presumably leaves money in Bahamas, or Ireland or whatever. So say you think of Apple stock as a honest to God piece of a company. How good is it for you for them to say "buy our company we make lots of money, except we'll never bring it to the US because the tax would be too high". It is almost an Enron with borders used to make real profits disappear rather than profits disappearing because they weren't real in the first place.

I disagree - if more corporations were playing the game honestly, and actually shouldering their share of the tax burden, the overall tax rates could be lower, and regular citizens who can't escape tax as easily, could pay less.

No they wouldn't pay less. Money is just a representation of productivity. The only source of productivity is people. Consequently, if the government wishes to take 30% of the country's productivity (GDP) via taxes, that means the income which goes into people's pockets represents only 70% of the productivity they generated regardless of where you extract the taxes. Unless there's an increase in productivity, if the government is taking 30%, then the amount the people have to spend for themselves is 70%. Where there 30% comes from is irrelevant.

Say there are just two types of taxes - corporate taxes and personal income taxes. First consider a case where there are no corporate taxes and the government gets all its revenue from personal income taxes. The guy who makes $50k/yr pays $15k/yr in taxes, and has $35k/yr to spend by himself.

Now say the people get upset that corporations "aren't paying their fair share," and government reallocates taxes so that its 30% of GDP comes entirely from corporate taxes. That is, there are no personal income taxes. Do you think the guy who used to make $50k and paid $15k in taxes now suddenly has $50k to spend? Nope. To pay for the corporate taxes, the guy's employer has to drop his salary to $35k/yr. Or they have to raise their prices, meaning that the $50k the guy takes home can now only buy as much as $35k used to buy when he was paying $15k in personal income taxes. Or some combination of the two. (A third alternative - fix wages and prices while increasing corporate taxes - would result in widespread bankruptcies and a dead economy.)

There's no free lunch. If the government takes 30%, that leaves 70% for the people regardless of whether the government takes the 30% directly from the people, or indirectly via the corporations the people work at and buy from.

"But what about the rich guys who own the corporations!?!?" you ask? Having wealth in the corporation gets them nothing (unless they're breaking laws and secretly embezzling, or using corporate assets as if they were personal property). For the corporate wealth to benefit them personally, they have to take an income from the company. And that income will be taxed via the personal income tax. If you think rich corporate executives and owners are making too much money, simply raise the tax rate on higher incomes and eliminate the many tax breaks (e.g. capital gains tax rate), deductions, and loopholes they enjoy.

Shifting taxes to corporations doesn't increase the purchasing power of the people. You can justify corporate taxes as a means to discourage certain behaviors (e.g. middlemen are discouraged by a 10% VAT because instead of a 1% arbitrage being sufficient justification for a flip, suddenly you now need an 11% arbitrage to justify it). Or because the paperwork for a corporate tax is easier and it allows you to collect the tax revenue at less cost. But you can't justify them as a way of giving people more spending power - it just doesn't work that way.

Having so many taxes (income, corporate, sales, property, excise, etc) is a really inefficient way to collect government revenue. It just creates excess bureaucracy and paperwork. Except for a few cases where taxes are used to discourage certain behaviors (e.g. fuel and property taxes), we'd really be better served by having just one tax. I think making it just one big personal income tax would make the most sense since that's the only way to implement a progressive tax system. And it would let everyone see exactly how big government is relative to the economy instead of hiding it in taxes they never see. But if you want to count corporations as "legal persons" and foist a personal income tax on them, I d

Do you think the guy who used to make $50k and paid $15k in taxes now suddenly has $50k to spend? Nope. To pay for the corporate taxes, the guy's employer has to drop his salary to $35k/yr. Or they have to raise their prices, meaning that the $50k the guy takes home can now only buy as much as $35k used to buy when he was paying $15k in personal income taxes.

Nope! If they were bringing in $1,000,000 before his salary of $50k, they would end up paying taxes on the $950,000. Any money spent that is essential for the operation of a business, is not taxed. That is why stock dividends are paid out after taxes; they are not essential for the running a of business.

The problem is it has become like the days of the old west, remember the old westerns how the bandits would head for the Mexican border and once they were across not worry about shit because all the border mess kept the rangers from giving chase?

Well now with electronic banking you can do that on a planetary scale in seconds. NO country can "close the loopholes" as another suggested because we are not talking about the laws of ONE country, we are talking about the laws of ALL countries as they can bounce a billion dollars through a dozen nation s in less than a second.

Never forget the words of Thomas Jefferson, who tried to warn us of the dangers of mercantilism: "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains." In the end they don't care if the economy of their "home" country collapses, they can have their funds moved in seconds and have offices in dozens of countries. There is no loyalty or patriotism to country, just profits.

Of course there is something they can do. Its even in the constitution a Letter of Marque. We simply indicate a list of countries that follow a multi national tax treaty. Money kept anywhere else is considered fair game. That is we will not enforce property rights from that countries banks, so anyone working for a Cayman islands bank can rip off their customers, legally deposit the money in the US, pay about 1/3rd in taxes and keep the rest forever.

Companies will find it mighty uncomfortable once the people who work in the tax havens have such lucrative options.

Letters of Marque were almost never used directly against ARMED aggressors. They were simply authorization for privately owned warships to engage in piracy against weakly armed merchant shipping. It isn't like the pirates would go looking for other warships to tangle with. Sure, the nations the targeted ships belong to might have been armed, but piracy was essentially what we would today call terrorism - avoiding regular combat and attacking civilian shipping.

Whether you call them Letters of Marque or something else, this measure probably would be pretty effective at discouraging the use of tax havens.

And none of that has a damned thing to do with tax evasion, simply because NEVER in history has anybody EVER come across or even thought, of a situation such as this!

We have reached the point where a billion dollars can go through 100+ countries and through a dozen shell corps in less than a minute, nobody EVER even imagined such a thing were possible, so naturally the laws haven't caught up and the megacorps are taking advantage of that and making sure they pay as close to nothing as possible.

Well, it can't fix everything. But it can fix a lot of the US's problems with its government. For example, getting rid of Social Security and public health care spending, in other words, privatizing those institutions would greatly reduce the expenditures that the US makes, something like 40% of overall spending right there.

Massive cuts in military spending in addition to that would completely eliminate the deficit and probably allow for some modest degree of tax reduction and/or debt reduction. The lat

NO country can "close the loopholes" as another suggested because we are not talking about the laws of ONE country, we are talking about the laws of ALL countries as they can bounce a billion dollars through a dozen nation s in less than a second.

Alas yes. What Apple (and google, and many other companies) are using is the 'dutch sandwich' or 'double irish'.

The end goal is to get the money to a 'parent' company in say, bermuda or the cayman islands - the carribbean islands generally have very low tax rates - often zero - and more importantly, special tax status in Europe because of their colonial history.

But you can't transfer money tax free from most european nations to the carribbean any more, because that loophole has been closed in the last few years in most places. So you first transfer it to a 'parent company' in the netherlands, as transfers within the EU are generally allowed and tax free. Then, since the netherlands DOES allow you to transfer it to the carribbean tax free, you transfer it to the 'parent company' in say, Bermuda. So now you have almost all your profits being channeled to the netherlands, and then the carribbean tax free. Corporation taxes are only applied in the final destination, and surprise, they're zero rated. So now you have billions of pounds/euros slowly accumulating in offshore accounts, pretty much tax free and entirely legal. The 'parent companies' in the netherlands and carribbean are merely holding shells with a lawyers office - one building in Grand Cayman has 18,000 US companies registered at it.

Then all you need to do is wait for a tax amnesty*, and you can 'inshore' the money in huge quantities. Or since pretty much everyone is doing it, you transfer the money from one company to another without ever leaving the carribbean. Hell, half the time you don't even have to leave the building. The bank of course is all electronic, and many of them are only available for outside companies. There are entire legions of legal firms and accounting firms and banks all set up to use this 'dutch sandwich' route it's so popular.

* the US has regular tax amnesties, which allow companies to bring money back on-shore legally for a special one-off low tax rate - the government's argument is it's better to collect some tax than no tax if it continues to live in Grand Cayman.

The starting point is often Ireland; since they have low taxes compared to the rest of the EU, they're a good place to put the actual company and what few people you actually employ inside the EU. So what few taxes that are unavoidable they do pay are at a lower rate of about 10%, instead of the 20% or higher elsewhere in the EU.

Luxembourg is popular for other reasons - they have a VAT rate of 15%, but many things are zero or low rated at 3%. In the EU, you only pay VAT once, in the originating country. So if you order something from France or Germany in the UK, you pay local VAT; and because of the EU free trade laws, you don't pay any import duty or UK VAT (if you import from outside the EU, you pay VAT plus any import duties at the border) so that means if you're selling 'things' inside the EU instead of services, you can pay the Luxembourg VAT rate. Amazon, for example, is based in Luxembourg for all their EU operations. They actually pay 3% VAT for ebooks, but charge the same price as other UK based sellers (which have to pay 20% VAT) - Amazon just get to keep the 17% difference. Or use it to undercut prices on a few headline books, to hook people into buying Kindles. They then pull a dutch sandwich on the corporate profits; what little they do pay goes to luxembourg. The UK sees virtually no taxes at all, as the physical warehouses are counted as merely a 'distribution network' - in effect, an extension of the postal system. The actual goods in them belong to the holding company in luxembourg on paper, and that's who you buy from on the website. So It doesn't actually matter if you buy from Amazon UK, or DE, or FR - they're all just local language versions of the

Yes, nobody should be allowed to shop around and find the best deal. If there's a K-Mart next door, it's dishonest to shop elsewhere! They opened up that store by you because they're going to be selling to your neighborhood! How DARE you drive down the street to get a better deal elsewhere?!

And yet, if everyone respect the spirit of the law instead of finding holes in the letter of it, we as a society would most likely be a whole lot better off.

Then again, this would require such things as integrity and honesty.

The simple fact is that once barriers to capital flow across national borders were torn down, the modern social state was doomed. When money flows across borders with little restriction, organizations whose implicit purpose is to maximize profit will shift their resources to countries with the lowest possible tax rates. This creates a race to the bottom in terms of tax rates, especially when large organizations that are capable of physically or financially moving from country to country move large percentages of their wealth away from countries like the US.

I have begun to realize that right wing countries seem to do well economically largely because they have reduced their tax rates below that of other less right wing countries. This brings a temporary influx wealth and a temporary economic boost. However if the tax rates do not continue to decline, large organizations will again begin to leave, bringing large deficits and economic decline.

Let me emphasize this: I believe right wing economic policies work (temporarily) because lower tax rates bring an influx of capital, and NOT primarily because of the inherent efficiency of the private sector in managing resources. I believe that the claimed "efficiencies" of private corporations, and the claimed "inefficiencies" of government organizations are highly overstated.

The implication of this is that if we as a society wish to have the amenities of a great civilization, then we will have to find a way to restrict the flow of capital across borders. Otherwise, we will be doomed to an asymptotic descent towards a minimum level of civilization. The gap between rich and poor will continue to increase, and, seemingly paradoxically, the economy will slowly grind towards a halt, as the pool of middle class consumers evaporates.

Overstated inefficiency of government organizations? I see we have never worked for one. I have. The difference between government and business is night and day. Breathtaking inefficiency, in areas I would never have considered inefficiency could exist. Seriously, it's quite creative.

And your single experience makes your argument completely true? I do not doubt the existence of government inefficiency. I have seen it. But I have also seen inefficiency in private corporations, especially when they enjoy a monopoly position. And I have seen very efficient government run organizations. My assertion wasn't that governments are always efficient, but instead that their inefficiencies are often overstated.

A good example is in the health care sector. By any objective standard, the private US healthcare system is highly inefficient. Healthcare in the US costs more per person than almost anywhere else in the world. And yet broad spectrum health outcomes are very poor. In addition, US healthcare doesn't cover a shockingly large percentage of the population. Contrast this with countries with public healthcare systems. Norway and Canada are excellent examples. They manage to cover the vast majority of the population, while their costs per person are far lower than in the US. And broad spectrum health outcomes in these countries are far better than in the US.

The difference is actually fairly simple to understand. In the US, the "institutional purpose" of healthcare companies is to make a profit. That's it. Their goal is not to make people healthy, but to earn a profit. And because the healthcare industry is an inherent monopoly or oligarchy, they use their power and dominant positions to overcharge people and/or deny them coverage. In doing this, they are merely fulfilling their "institutional purpose".

Contrast this with well run public healthcare systems. In such systems, the "institutional purpose" is to make people more healthy. Doctors are always taught to have this goal, and take the Hippocratic Oath, even in the US. The difference though is that in well run public healthcare systems, the managers above the doctors also share the desire to improve people's health, while in the US, improving people's health is secondary to the goal of maximizing shareholder return.

There are successful private systems elsewhere in the world (Switzerland for example), but even in Switzerland, the government has its boot on the throat of healthcare companies. They are simply not allowed to misbehave, as they are in the US. The inherent problem, which most of a right wing bent seem to ignore is that of monopoly. There are some industries that cannot possibly have real competition. And when you have a private monopoly, it the worst of all possible worlds. Monopolistic companies can behave as they want with impunity. If competitors arise, they buy them out or use their power to crush them. Customer choice is limited, and thus so is customer power.

I find the ideological division and characterization of private efficiency and public inefficiency is intellectually lazy, and ignores the subtleties of the complex real world. Ideologies are crutches for those who don't wish to really think.

There is a reason both Obama and Romney brought up Cleveland Clinic in a debate, they bill as things should be. Doctors work for the hospital, no separate bills for each doctor, each test... the cost for doing something is a base rate that handles everything involved. No surprise bills showing up months after the fact, no extra referals within the system because they're paid the same regardless of how many tests are done. Not surprising there are fewer tests and higher results as profit motivation isn't the

When you file your taxes at the end of each year, do you take advantage of the tax deductions available to you to reduce your tax burden or do you pay the maximum amount?

For the sake of moving this conversation along a little faster, rather than wait for your reply, I'll make the assumption that you do take advantage of the tax deductions that are available to you to reduce your tax burden (because, well, anyone who doesn't is simply an idiot). Why is it ok for you to reduce your tax burden and not ok for Apple (*)? Or are you just ticked off that they are better at it than you/your accountant? I mean, really - if you could legally pay 2% taxes, are you trying to tell anyone here that you wouldn't? Are you seriously trying to tell anyone that your sense of honesty and integrity would stop you from taking advantage of legal tax deductions?

*I love how this is a story about Apple yet EVERY SINGLE COMPANY does this - it's just a question of how good the company's accountants are at finding all available tax deductions to maximize the payments but EVERY SINGLE COMPANY does this to one degree or another. But let's rage against Apple because that's cool and hip and that generates page views...

And yet, if everyone respect the spirit of the law instead of finding holes in the letter of it....

If a corporation chooses not to take advantage of a legal way to increase its profits, then it leaves itself open to legal action by shareholders. The corporation has a fiduciary responsibility to find the holes.

There's no such thing as the spirit of a law. There is only the words which define the law.

Why is the job of Apple customers to enforce tax law? We have an agency, the IRS whose job it is to enforce tax law. Customers should comfortably buy Apple products and if Apple is guilty they should get their ass nailed to the wall for tax evasion with no interruption in service to anyone but their shareholders who watch a nice chunk of the cash disappear in penalties and fines.

If they haven't broken the law, they law should be changed to make this sort of thing much harder. Again nothing to do with customers.

And that's the problem - there's all kinds of outrage that "they only pay TWO PERCENT!" but if the law allows it, that *is* their "fair share."

Secondly, the problem with the "fair share" is what the law allows for different actors. For typical private citizens of the US, if they're making money overseas, they still have to file with the IRS. I may have some of the deatails of, but it goes something like: if you paid tax on your overseas earnings overseas and the tax is less than what you would have paid at home, you make up the difference to the IRS. It's a lot more complicated than that, I'm sure, but pretty much any private

As pointed out by tragedy [slashdot.org] above, the IRS holds that any earnings by an American citizen are taxable, regardless of where they were made.

There is a mechanism provided to account for taxes paid to the government of the country you are working in, but (there is always a but) that country has to have signed a tax treaty with U.S.

I know of two people (one spent 20 years in the U.S. Air Force, the other 20 years in the U.S. Navy) who have renounced their U.S. citizenship over taxes, because after retiring they decided to move to a country that doesn't have a tax treaty with the U.S.

You see, individuals have a hard time over money earned outside the U.S., corporations get to keep it.

You seem to be suggesting that doesn't happen. You've never considered that something is worth more than is being charged and even wanted to pay more? What about giving a tip when service is better than expected? Isn't that the same thing?

I admit it - I *have* offered to pay more on occasion, but it's never been in 'bucks', and never as much as 1.99 -> 'fifty'. Tips seem to be the most acceptable way of ove

Businesses go way beyond tax avoidance. They bargain with local governments for tax breaks in exchange for locating there. Is that unfair? Maybe, maybe not. Is it against the public interest? Absolutely! Their interests do not always diverge from the public interest, but very often they do.

Businesses go further than that. They lobby for favorable laws, favorable spending, tax treatment etc. Look how hard Amazon fought against paying sales taxes. Amazon even tried to force the issue by shutting down all facilities in those states that tried to collect, to punish them. What's the difference between what they do and bribing? Perhaps just semantics. At any rate, it's all gone too far. They take the profits, and stick the rest of us with the bills. If Amazon won't pay tax, then they can remove their sorry asses from my state and good riddance. Don't let the door hit your butts on the way out, Amazon. We don't need those kind of businesses.

No doubt that banks, shopping malls and developers have more say in, for instance, road and street planning and traffic light placement and timing than any mere representative of the public, such as a city planner or mayor. And it's obvious they have no vision. They think only of themselves. Running a business is hard. They're looking for every edge, and they purposely disregard all other considerations. Social good be damned, except insofar as that's good for business. How should the lights be timed to drive the most people to their stores? They actually prefer badly timed lights on the idea that the more time people spend in front of their stores, the better business will be. And taxes? They care little if a city is driven to its knees because they got too good a deal on taxes, bargained too hard and sharply, and snookered the representatives of the moment. They feel no responsibility whatsoever for that. The cities are there for them, providing transportation, water, sewage, electricity, law enforcement, emergency services, and of course, customers. How quickly the police jump when business whistles! That overzealousness has lead to many embarrassing incidents over the years, things like the police being called to harass bank customers who wanted to close their accounts and weren't doing anything wrong, and border agents confiscating prescription medicines. But they sure aren't there for their cities. Indeed, they have the gall to whine that we aren't friendly enough to business. Joe Consumer can pay for the police and all the rest, but that's not enough, not for them.

Except this money was never IN the USA. Apple sent blueprints to Foxconn, then Foxconn bought the parts in Asia and assembled iThings. Apple then has the products delivered directly from China to each country wher they are sold via "Apple of here".

So where did the USA have any jurisdiction to collect taxes? The parent Apple USA only collects the profits. While on paper they get to claim them all, they don't actually move the money to any one bank account. Corporations are a type of fealty where they have independant accounts that are "sworn" but not owned by the parent. This is necessary to navigate all the local laws, but the profit issues are a secondary issue.

What makes you think we would be better off with more money in government, famous for wasting it on things like $600 toilet seats or unused airports named after congressmen?

The two choices are a $600 toilet seat and $600 in taxes, or a $600 toilet seat and $600 in debt. Oh, and since we haven't paid off any debt since the 1950s or so, so by the time you pay back that borrowed $600, you've paid $2400 in taxes for the $600 toilet seat. So, $600 for the toilet seat or $2400 for the toilet seat? Which do you prefer.

The two choices are a $600 toilet seat and $600 in taxes, or a $600 toilet seat and $600 in debt

In the real world, when I make less than expected, I simply buy less. Perhaps I do not take a trip, eat out less often, or not buy a few books I like.

But in your world when the government gets less income than expected (or in fact even when it gets exactly what is expected, because after all the effects of tax breaks should be baked in to income estimates) the government; why it cannot reduce spending whatsoever

Do you know that toilet seat was custom designed and manufactured to fit in the bathroom of a US Air Force bomber? When you custom design and manufacture a couple hundred toilet seats, yes, they are going to cost $600. I bet the toilet seat on the space shuttle cost 100x that...

And please now bring up the $400 hammer. That one that was custom designed to work on repairs in a submarine without creating enough noise to be detected by sonar. Such a waste! But not as much as would have been wasted if a $1B nuclear submarine was detected because of a loud hammer.

As long as it's tax avoidance, rather than tax evasion, nothing illegal in this. Everyone (corporations included) want to pay as little tax as possible. It's the governments job to close the loopholes.

Yet Apple is a heavy user of the government-provided resources in my country that my taxes pay for, and is one of the organisations with far more frequent access to the very politicians you're suggesting should fix the problem.

Are you suggesting I should be happy about their ability to manipulate the situation so I get to pay for their infrastructure?

Steve Jobs also paid those taxes as he grounded his company. He also paid taxes like you do, in order "to buy civilization", like it is always quite fondly quoted around here.

So he "bought" his civilization: infrastructure, laws etc. and he did something with it.

You should not be happy with the Apples ability to manipulate the situation, but that is the point: the real power is the power invested BY YOU to YOUR GOVERNMENT. So, yeah. The Gov. should fix those holes.

I doubt any governments are going to fix this. They've been bitching about Ireland's corporate tax rate for years now which is utterly irrelevant as the companies in question arent even paying Irelands corporate taxes.

The details of the Double Irish/Dutch sandwich scheme is even on Wikipedia and has been for years. And it will come to no surprise to anyone here, but fantasy pricing of 'intellectual property' finds yet another use as a great way to transfer profits to a shell corporation set up in a place wh

In France we call it "fiscal optimization", which I find kind of cute : it makes it clear that corporations have an interest in being bad citizens.

The problem is that the solution is seen by many as the enemy of free-trade : it requires to put commercial barriers on tax-havens. As long as international transactions between countries are not taxed to take into account the different weight of different tax rates, you will have tax avoidance.

I don't understand why there is so much resistance to this idea : we are seeing huge border tax when we import anything physical, why couldn't money transfers be taxed similarily? Why is it an idea that only far-left or anti-globalization hippies are heralding?

The article points out that Microsoft, Dell, Pfizer, and Wyeth have also taken advantage of Irish corporate tax incentives. So, a lot of this isn't "beancounter magic" at all - its a carefully negotiated corporate strategy that benefits the company as well as the host country.

1. Bribe (sorry, contribute to the campaigns of) legislators.2. Have them pass laws giving you big tax loopholes at the expense of schools and healthcare and whatnot.3. Save enough money on you tax bills that it exceeds the cost of the brib...er, campaign contributions.4. Profit!

Yes there are some ways around even for an individual but why should I? Here in NZ I have used free hospital care for myself and my family many times in emergencies - healthcare is funded almost entirely from general taxation. I have no problem at all with paying around 30% of my income for this and many other services provided by government.

I know it's also cool to bash big business, but we're talking about just ONE company here who - if they'd paid the already low rate of 12.5% - would have increased r

I like to point out that I was in the top 10% of wage earners in the US (the very bottom of that range), and I paid 10% in federal income tax. Between property tax on multiple properties, mortgage interest (it's financially beneficial if you can buy a house outright to take out the longest term loan possible at the lowest possible rate and invest your money in stocks, because the tax breaks on the interest make the cost of the loan lower than face-value), health and education deductions, my taxable income was significantly lowered. Anyone who makes enough can afford to "mask" income in untaxed or lower-taxed schemes.

It isn't tax evasion. It isn't really even tax avoidance. The rules are generally not "loopholes" but deliberate social grooming, detailed by Congress, to encourage certain behaviors (marriage, kids, home ownership). It isn't gaming the system, but being gamed by the system. We'd be better off if all deductions were eliminated. All the artificial pressures would be gone.

I don't know about that. If he wants to pay more, nothing is stopping him. Seems more like he wants others to be forced to pay more (although his taxes would go up too and apparently he wouldn't mind that).

Tragedy of the commons. If one multi-millionaire wants to pay more, it won't matter. If he convinves others that *every* multi-millionaire should pay more, then it matters. Whether voluntary or mandatory isn't relevant. A single person, even Bill Gates, giving their entire fortune to the US government wouldn't make a difference. So to do so is foolish.

Taxes on corporations are shared by the purchaser of its products, and by its equity holders. The equity holders are "the company". To say that it's only passed on to consumers is simplistic and misleading.

Lol you can apply this reasoning to every tax paying entity, individuals included. "You don't pay any taxes, your employer pays them for you"

No, no you cannot. I know you're an AC and won't see this response anyway, but still. For a corporation, or any type of business really, a tax is just another cost of doing business. This is the core problem with those special people who demand higher corporate taxes. If you raise corporate taxes all the corporations, quite reasonably I might add, are going to do is raise their prices to compensate. They are not going to lower their profits because government decided they wanted a bigger piece of the pie.

For a private citizen, taxes are just a cost of business (living) as well. Just as I need to buy or grow food to survive, I must pay taxes to avoid being shot or jailed. It is more efficient today than in previous centuries, as rather than guessing how many thugs I'll have to pay for my life,I know in advance how much I need to remit to a central clearinghouse.

For a private citizen, taxes are just a cost of business (living) as well. Just as I need to buy or grow food to survive, I must pay taxes to avoid being shot or jailed. It is more efficient today than in previous centuries, as rather than guessing how many thugs I'll have to pay for my life,I know in advance how much I need to remit to a central clearinghouse.

Interesting, and true, way of putting it. Of course, there is the difference that you cannot just raise your pay to compensate for a sudden increase in tax rates. A company, limited by what the market will pay, can and will certainly do so. Depending on how well liked the company is by their client base they could even point the finger at government for the higher prices and not have to deal with the negative impact of the price increase, or at least not as much of it.

That does solve the profit off-shoring problem up to a point, but it creates another problem because consumption taxes are heavily regressive. I tend to think you're right that it's worth exploring the idea of dramatically shifting where the tax burden falls, but the entire tax system would need dramatically rebalancing to avoid screwing everyone on relatively low incomes in the process.

The retail price is set at whatever is most profitable for the retailer. This is a function of how much profit is made per unit and how many units will sell at a particular price. A change is cost will likely change the ideal price point. Usually, some but not all of the cost increases go into a higher price. So, if some new tax occurs that means Apple has to pay an extra dollar per unit, the price might go up 75 cents. The real numbers are going to vary depending on factors such as the price elasticit

No... that's not how taxes work... I see what you are tyring to say... in that they just pass on the costs... but the price at retail is set by what the customer is willing to pay, not by the cost of production, so any cost (including taxes) is money out of the firm's pockets.

The price at retail is set by what customers are willing to pay at a certain supply; if taxes were not built into the price, demand would press the price down by the amount of the missing tax (assuming competition).

The problem is VAT is n't a tax on companies, it is a tax on consumers with the companies being able to claim back their VAT expenses due to them acting as tax collectors for the government. An increase in VAT would immediately be passed on to the consumer.

That's not true... many essentials (eg non-restaurant food) are zero-rated, or less-rated for VAT.(Though I would agree that if VAT were made to replace corp. tax, then we might want to look at increasing the list of essentials, or have a half-rate for certain things).

An insurance company keeps two sets of books, one on insurance operations and one on investments. most of their tax liability comes out of operations which is why they typically show a loss on paper on their operations and then use that credit as a carry across to the investment side of the house. when I worked for Equitable we paid ZERO tax for many years.

For that to work you would need to ensure ALL company benefits are taxed. Imagine the beaucrazy necessary to put a value on every single thing your company provides for you directly or indirectly. Do I sense you wrong, or do you really want more invasive government oversight of your personal and business life??

Why would anybody have a personal income when they can just register a company to buy them what they want?

This results in gaming the fees and licenses for incorporation papers. Well, we don't have a tax, per se, on corporate income, but it costs $10K of lawyer fees to set it up and if you don't want to get audited you'll have to spend $10K/yr on professional accountant tax filing, etc etc.

One argument for corp income tax is preventing citizen income tax evasion. Too "easy" to boost share value by accumulating tax free cash on the corporate books instead of paying out salary, and then distribute valuable shares instead of payroll, and then get to track when and how each individual share gets sold on the market and cap gains tax each share. It would pretty much have to be a package deal where the cap gains tax AND the income tax are eliminated at the same time. The point is its all inter-re

The health of the economy is measured by the "flow" of money. In essence, it's the value of the total GDP measured in a time period (usually a year). Compared year by year, you always want this number to increase - it drives innovation, efficiency, and progress.

Money flows from people to corporations. By taxing people and not corporations, you are inherently slowing the flow of money, and reducing the corporate incentive towards higher productivity.

Well the problem is that corporations can just create sub-corporations for every country. So Apple would not have a physical presence anywhere. Apple-US, for example, would handle all the sale in the US, then 'pay' Apple 110%. So Apple-US would be operating at a loss, having to pay 0 taxes.

you act like cooperations only pay for things needed. Yes you will get higher prices if you make them pay more taxes, but the higher ups in the company will still receive their bonuses, yachts, mansions and etc if you taxed them at 100% or 0%

The difference between charity and tax supported government sponsored social programs is: who is buying the gratitude of the poor when they hand out the money. Its all about buying loyalty. Lets print the name of a tax payer on each public assistance check handed out. So the recipients will know who to thank.